DFMA and reshoring of manufacturing work: Take 2DFMA and reshoring of manufacturing work: Take 2

, and that the emphasis of presentations there on ways to support a strong manufacturing industry in the U.S. Naturally, DFMA was a hot topic; Boothroyd Dewhurst was the first company to offer DFMA software and remains a leader in the field. We caught up with conference speakers and others to gather some additional plastics industry-specific insight.

The conference was held as reshoring efforts-work sent oversea from the U.S. but now returning or being "reshored"- seem to be getting traction as savvy manufacturers learn with experience that all that glitters, to include countries with low wage rates, are not gold.

Speaking at the event, Harry Moser, founder of the Reshoring Initiative and retired president of machine tool maker GF AgieCharmilles, noted, "Traditional corporate and enterprise accounting systems do not generate total cost of ownership (TCO) data for companies locating sourcing overseas in search of the lowest labor cost." The job solution lies in recognizing the "hidden costs of offshoring and embracing upfront engineering as a business model for innovation and profit creation," and calculating true costs. "When total cost of ownership (TCO) is calculated," said Moser, "most companies headed offshore find that they have saved maybe 10%, rather than the 30-40% they based their decision upon."

Another speaker at the DFMA event, Dave Meeker, product consultant and lecturer at MIT, provided updated information on a study he co-authored in 2004 on the hidden costs of offshoring (Outsourcing to China: A case study revisited seven years later) and shared his views. "Seven years later, the problem of no accounting for total cost continues for most companies," said Meeker. "Labor is the common metric businesses pick in deciding to take productions overseas. Yet, the largest slice of the cost pie is not really the labor content but the material and manufacturing process choices engineers make."

In an e-mail interview with Jay Mortensen, a consultant for procurement engineering/target costing, and co-author with Meeker on the updated 2004 study, we asked him about some of the differences he sees between plastic mold making shops in Asia and the U.S. "Mold making doesn't always follow manufacturing trends," said Mortensen, who currently lives in South Korea. "Correct me if I'm wrong, but most U.S. mold makers tend to be smaller enterprises compared to many Asian mold makers. The investment structure of a large Chinese shop can give them an efficiency and speed advantage that is difficult to overcome.

"That said, there are issues of quality and performance upon which U.S. mold makers can still excel," he continued. "If U.S. mold makers can understand the entire value chain, and the costs associate with them, they can win back business. But, it will take an industry effort coupled with DFMA-type thinking to achieve this goal."

Steve DeHoff of Stress Engineering (Houston, TX), a consulting company that helps brand owners and OEMs coordinate their outsourcing, commented in a recent interview with PlasticsToday that part of the trend in reshoring is that "people offshored work, then discovered they got the math wrong." In his judgment from working with large OEMs and brand owners, "the trend [of reshoring] is more about money, particularly wages and freight, than about product quality."

DeHoff sees the "equilibration of U.S. and offshore wages" as the primary driver of the reshoring now seen in some manufacturing sectors. "We have a slack labor market in the U.S. at a time when the Chinese labor market is tight," he explained. "The other side of the equilibration is that wages are dropping here while wages and inflation in China are rising. The greater that movement toward wage equilibration, the more you'll see people bringing manufacturing back to the U.S."

A recent survey of members of the American Mold Builders Association (AMBA) asked the status of offshoring among their OEM customers, and whether AMBA members' customers are asking them to make use of off-shore suppliers. Responses show a mixed bag, depending on a number of factors. However, a majority of respondents (65%) said their customers are "moderately looking for off-shore suppliers" or customers "are open to the idea but not actively looking for off-shore suppliers." About 31% of the mold makers responded "customers are relocating work from off-shore back to U.S. suppliers."

Some AMBA survey respondents reported they are extremely busy with automotive customers. "Automotive is a buzz, and we can't get the molds built fast enough," said one respondent. "You get the feeling that they are in a hurry to get product to market without any of the offshore quality issues they have had with these types of molds."

One respondent hasn't seen much change in attitude among automotive suppliers, in spite of recent rumors of a "kinder, gentler" automotive industry. "I have also seen more and more automotive tooling being sourced offshore and not domestically. I would think with the bailouts that the automotive companies received there would be some stipulations on having more work done domestically."

Another respondent noted, "People are starting to understand the importance of keeping business in the U.S.; also with the Euro so much stronger than the dollar it is cheaper for Europe to build in the U.S."

And yet another respondent wrote, "While we're seeing some [mold projects] coming back, it's a very mixed bag right now. We're not totally out of the woods as purchasing management still has the mindset that offshore is cheaper. Until they get the real cost figured out for the life of the program, we will always be seen as more expensive. If measured over the life of the program, I believe we are the low-cost provider."

In an interview on this topic, Meeker concurred that it is a "very mixed bag at the moment" with regard to offshoring. "If you're manufacturing overseas you're probably getting your molds there. Theoretically it's cheaper but it's all about the details - the TCO -- and looking closely at exactly what you're getting. "

Meeker noted that it also depends on the type of parts you're molding. "If you are molding complex parts in large molds rather than 'rubber duckies', you're less likely to be satisfied with an offshore mold," he said. "Not that there aren't suppliers in China who aren't capable of building these types of molds, but it takes a lot more diligence and looking at the details, and summing everything up before making the decision to go offshore." 

Andy Plyler, president and CEO of Galaxy Tool Corp. in Winfield, KS, noted that one of the reasons for his company's decision to invest in more machinery and personnel to boost its mold manufacturing operations, is an increase in reshoring of mold projects. "We're seeing a lot of work come back," Plyler stated. "We've had one primary customer say they're constantly pulling work back from China because they're doing a lot of rework on parts. Some [mold purchasers] get it and some don't, largely because they're siloed - they don't see the whole picture, just that initial lower price of the mold."

Jim Boley, vice president of business development for Flexpak, a custom thermoformer of thin-gauge packaging, also sees more work coming back from low labor-cost countries, particularly among smaller companies. "We've gotten quite a few tools back from Asia," he said. "One customer came to us and said, 'We're going to buy American. It might hurt us a bit price-wise, but it's the right thing to do.'"

For a number of years the AMBA has offered its "Know Your True Costs" analysis booklet to help mold purchasers evaluate all the added costs that go into purchasing molds offshore and examine these details. Harry Moser's Reshoring Initiative offers free software and an online library of 98 articles to help companies compare the cost of manufacturing in the U.S. and LLCC's (Low Labor Cost Countries).